What is computing income?
The computation of total income is a systematic presentation of all incomes, exemptions, rebates, reliefs, deductions, and tax calculations. There is no standard format for this; however, the following elements are generally considered when calculating total income: personal details of the assessee (name, father's name, address, contact details, etc), bank account details, income details, and calculation of taxes, and details of taxes paid.
Uses of computing income
Form ITR-4 is used for calculating income and filing an income tax return for taxpayers who have chosen the presumptive taxation scheme. The taxpayer must be aware of the regulations outlined in Sections 44AD, 44ADA, and 44AE when calculating income for the ITR-4 form. Section 44AD is primarily concerned with calculating 'Business Income,' which is applicable if the taxpayer is a resident individual, resident Hindu Undivided Family, or resident partnership firm, but not an LLP.
Salient features of computing income
The assessee who chooses the scheme mentioned above is eligible for the following features when calculating income tax:
1. The taxpayer can file his income tax return in ITR-4S.
2. The taxpayer is exempt from keeping books of account.
3. The taxpayer is aided by the ability to pay advance tax in a single installment. This payment must be made by March 15 of the fiscal year immediately preceding the current fiscal year.
4. The taxpayer is given priority over other taxpayers who must pay the tax in four installments prior to the assessment year.
5. If the taxpayer is covered by section 44AD, he or she may also declare a higher income.
6. The taxpayer should be in the business of transporting, hiring or leasing goods carriages.
7. The taxpayer should not have owned more than ten goods carriages in a financial year.
8. Income would be calculated on an estimated basis at the rate of Rs.7,500/- for each month that the taxpayer owns the goods carriages.
9. No deductions are permitted except for remuneration and interest to partners.
10. If the taxpayer wishes to declare less income, he must keep books of account and have his accounts audited on a regular basis.
11. Returns must be submitted electronically and include a digital signature.
